Mothballing Requires More Than Idle Thought

Proper steps can protect plant assets and enhance eventual reactivation or sale.

By Bernie Price, Polaris Veritas Inc.

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Today’s weak global economy is forcing closure and immobilization of plant and equipment worth billions of dollars. Unfortunately, such actions usually are done hastily and typically against a background of acrimony. Even worse, they can diminish or even destroy the value of assets and preclude the possibility of reactivating them once business rebounds.

Two major plant dismantling/second-hand equipment vendors recently told me that when the decision to shutdown comes most companies remove anything that could present an immediate danger and essentially close the doors and walk away from millions of dollars worth of equipment. Leaving assets “as is” to deteriorate can make them suitable only for scrap in just a matter of months. Yet, it’s a fact that an unused plant — if properly prepared for shutdown and left in fairly good condition — can retain much of its value. Engaging in a well-planned process of deactivation/mothballing can pay off whether the intention is eventual reactivation or sale of assets.

In my experience through three boom/bust phases in the process industries and oil well drilling, 75% of idled plants or rigs eventually were reactivated in some form. The bottom line is that while it only should cost 5% or less of Plant Replacement Value (PRV) to reactivate a well-preserved unit, restarting an inadequately mothballed plant will cost 20+% of PRV. This often is a deal breaker.

So here, we’ll look at what should be done and describe specific products and techniques. None of these are new or experimental — there’re 40+ years of documented experience for some.

The Approach
It’s essential to have a clear view of how to mitigate if not defeat the constant foes of galvanic/bio corrosion, mold, mildew, etc. While much depends on local conditions, wetter and colder environments pose greater challenges for handling humidity, while blowing dust is an issue in high desert regions.